IFTA 23rd Annual Conference Friday, October 8, 2010

“Border Line” Pattern for the Ichimoku

Kinko Hyo (Candlestick Chart)

- Positioning with 26 Base Lines and Timing for

Time--Based Loss Cutting-
Time Cutting-

Yukitoshi Higashino, MFTA

1
 Five Factors of the Ichimoku Kinko Hyo (hereinafter Candlestick Chart)

S&P500 (daily chart: June 2009 to August 2010)

(P)
April 26
1250 Conversion line
1219.80 Leading span 1
Conversion line, base line, leading span 1,
1200 leading span 2, and lagging span are the five
Aug. 9
factors of the candlestick chart, and a chart
1150 showing those five factors is the “kinko hyo” 1129.24
(equilibrium chart).
1100

1050
Feb. 5
1000 1044.50 July 1
1010.91
950 Leading span 2

900

Base line Lagging span

850 July 8
869.32
800
2009/6

2009/6

2009/7

2009/8

2009/9

2009/10

2009/11

2009/12

2010/1

2010/2

2010/3

2010/4

2010/5

2010/6

2010/7

2010/8

2010/9

2010/9
2
Ideal Top and Bottom Pattern in a Candlestick Chart

Double bottom Double top

c 26 d

a 26 b

 The ideal period from a low price “a” to “b” and from a
high price “c” to “d” is within 26 days.

Why?
3
Bottom Pattern Shifting from Fall to Rise

Stock price
Within 26 days from the
○ expected low "a," the price goes
Ⅰ
above “a” to “b” before turning
upwards.
a 26 b

Within 26 days from the

expected low "a," the price goes
Ⅱ × below "a" to "b" before turning
upwards.
a 26
b
Starting from the expected low "a,"
△ the price falls to "b" which is higher
Ⅲ than “a” and then rises, but in a
period that exceeds 26 days.
a 26 b

4
Ceiling Pattern for Shifting from Rise to Fall

c 26 d
The price goes to lower “d” than
Ⅰ ○ the expected high "c" within 26
days and then goes down.
d
c 26
The price goes to the higher “d”
Ⅱ × than the expected high "c" within
26 days and then goes down.

c
26 d
The price does not exceed the
△ expected high "c" and goes down
Ⅲ
after hitting "d" but in a period of
over 26 days from "c."

5
Important Points in Base line and Lagging Span

・ “Border line” - The ideal top-bottom pattern that

introduces the daily change concept of “26 days” from the
base line to the lagging span.

 Base line: the middle price between the highest and

lowest price in the past 26 days including the current
day (highest price in a period of 26 days + lowest price
in a period of 26 days) ÷2
 Lagging span: current day’s closing price projected into
the past by 26 days including the current day

6
 What is the “Base Line”?
DAX and base line (daily chart: March 2010 to August 2010)
6600

April 26 26 days

6400 6341.52

6200

6000

5800
July 5 Base line = (highest + lowest in the past 26 days)/2
On the following day, the same calculation is
5809.37
conducted by including the prices of the new day
5600 May 25 but excluding the prices of the oldest day in the base
5607.68 line calculation period.

* “26” used here is the important basic value in the concept of the kinko hyo (candlestick chart).
5400
2010/3

2010/3

2010/4

2010/5

2010/6

2010/7

2010/8

2010/9

2010/10
7
 What is the “Lagging Span”?
SX5E and lagging span (daily chart: May 2009 to August 2010)

3200 Downturn
Jan. 11
Downturn April 16
Upturn 3044.37 3027.14
3000 Aug. 5
2849.45

2800

Nov. 3
2600
2693.80 Feb. 8
2617.77
2400 Upturn May 25
2448.10

2200 A line connecting daily values in the past 26 days including today’s closing

* “26” used here is the important basic value in the concept of the kinko hyo (candlestick chart).
2000
2009/5

2009/6

2009/7

2009/8

2009/9

2009/10

2009/11

2009/12

2010/1

2010/2

2010/3

2010/3

2010/4

2010/5

2010/6

2010/7

2010/8

2010/9

2010/10
8
What the “base line” means in the border line.
・Base line: (highest in 26 days + lowest in 26 days) ÷2

Base line When the price makes an upturn

within 26 days from the expected low
Ⅰ ○ "a," the base line goes up in 26 days
Stock price
from the expected low "a," and
therefore stock prices tend to go up.
a b
26
When the price goes below the
expected low "a" within 26 days from
Ⅱ × "a," the base line cannot go up and
provides resistance to the increase in
stock prices, which increases the
a possibility of the price going down.
26
b
When the price does not go down
below the expected low "a" and makes
Ⅲ △ an upturn after a period of 26 days, the
base line moves sideways and then
a b drops to become resistant to the rising
26 of stock prices.

9
The softer the downtrend, the stronger the market (base line). Why is that?

Stock price
Base line
When a dip to "b" is strong relative to the
expected low "a," the leveling period of
the base line tends to be extended. In that
period, if the stock price does not go back
Ⅰ
up and exceed the high, the high of the
base line during the calculation period
becomes lower, thereby causing the base
line to drop again.
a 26 b

When a dip to "b" is weak relative to the

expected low "a," it is relatively more likely
that the price will go up above the recovery
high. Therefore, the high of the base line
Ⅱ during the calculation period go higher, and
b the uptrend of the base line continues,
making it likely to create a stronger market.
a
26

10
What the “lagging span” means in the border line.
・Lagging span: current day’s daily closing price projected into the past by 26 days

Stock price When the price makes an upturn

within 26 days from the expected low
Ⅰ ○ "a" after hitting "b," then the lagging
span exceeds the stock price. (upturn
Lagging span
or buy signal).
a 26 b
When the price hits "b," which is
lower than the expected low "a"
within 26 days from "a," then the
Ⅱ × lagging span remains below the stock
price. (continued downturn or sell
26 signal).
a b When the price does not go down
below the expected low "a" but takes
Ⅲ △ an upturn after hitting "b" in a period
of over 26 days from "a," the lagging
span is highly likely to go down below
b the stock price again. (downturn after
a 26 upturn, sell signal).

11
The softer the downtrend, the stronger the market (lagging span). Why is that?

Stock price
Lagging span

When the dip to "b" is strong relative to

the expected low "a," the lagging span
tends to touch the stock price of 26 days
Ⅰ ago and thus is more likely to fall below
the stock price. There is a high
possibility of becoming a downturn.

a 26 b

When the dip to "b" is soft relative to

the expected low "a," the lagging span
tends not to touch the stock price of 26
days ago and is thus relatively less likely
Ⅱ to fall below the stock price. There is a
b low possibility of becoming a
downturn.
a
26

12
Basic Pattern for the Border Line
・ The border line is composed of the ideal patterns of the lagging
line and the base line.

△
An ideal case is that the
line does not go down
below the base line and
△ makes an upturn in
26 about 26 days from the
second lowest bottom.
Stock price
Lagging span
a 26 b
Base line c 26 d An ideal case is that
26 the line does not go
up above the base line
▽ but drops again about
26 days from the
second highest peak.

13
The Strong Border Line Pattern and the Temporal Loss Cut
・ The value goes above or falls below the recovery high or the immediate low within 26 days.

The base line continues to rise, 26

and the stock price shows a
strong up trend. △

▽
△
△
Stock price 26
Lagging span
a 26 b ▽ Loss cutting due to the fall of the base line

Base line c 26 d
26 △ Loss cutting due to the rise of the base line

▽
▽ △

▽
The base line continues to fall, 26
and the stock price shows a
strong down trend.

14
E Calculation after the Border Line (Setting of the Target)
3E 800
26
1000
＝
＝ 50
950
＝
750
E 900 ＝
＝
E 700
850 ＝
＝ 50 650
＝
800 26 3E 600

 A rise from the second lowest bottom or a drop from the second highest
peak is often accompanied by a gap.
 Double of the increment or decrement of the initial move becomes an
equilibrium point.

15
Equilibrium Point is the Arrangement of the Lateral Axis and Vertical Axis.

Equilibrium point (important

・ Basic values ＝
76 change day)
(9, 17, 26, 33, 42, 51, 65, 76,
＝ 65
83, 97, 101, 129…)
＝
42

＝
Stock price
＝ No. of days

26

・ Equivalent ② 53+29-1 168 ④

values
＝
③ 29+88-1 116 ③
④ 53+29+88-2 ＝
81 ② Equilibrium point (important
change day)
＝ 53 ①
29
88 53 ＝
Stock price
168 (53+29+88-2) ＝
No. of days

26

16
Time Theory (Concept of Equivalent Value)

=
I ＝I I ＝V I ＝N
V＝I V＝V V＝N
N＝I N＝V N＝N

17
 Itochu Corp. (8001, daily chart)
January 2003 to November 2003
65 64
52 351
348 347

39

39
26 △

39 △
●
Low within 26 days
26

18
Nomura Holdings, Inc. (8604、daily chart)
November 2002 to September 2003
89 90
1803
1800
179

179

179
26
△
179
●

26

19
Marubeni Corp. (8002、daily chart)
26 High within 26 days March 2008 to March 2009
●
102
102

102
102

102

102

102
260
274 129

20
 AAPL UW (daily chart、Feb. 2008 to April 2009)
($) 48 48
200 May 14, 2008 February 2008 to April 2009
192.24
●
180
19.73

160 19.73
152.78 152.91
140 19.73

120 19.73 Sept. 18, 2008

120.70
100 19.73

80 19.73
73.86 Jan. 20, 2009
173 78.20
60
08/2/1

08/3/3

08/4/1

08/4/29

08/5/28

08/6/25

08/7/24

08/8/21

08/9/19

08/10/17

08/11/14

08/12/15

09/1/14

09/2/12

09/3/13

09/4/10

09/4/30
21
Sumitomo Metal Mining （5713、 daily chart ）
150(08.3.24) 151 1626

1632
45 46
270
77
270
1079 1095
1092
270

270

26 August 2008 to July 2009

22
Sumitomo Metal Mining （5713、 daily chart ）

May 2010 to September 2010

26

26
26

23
NTT DOCOMO（9437、 daily chart ）

October 2009 to August 2010

26 26

26

26

24
 Deutsche Bank （ daily chart ）
70
€
October 2008 to September 2010
2009.10.15 2010.4.15
60.55
58.29
60 58.37 2009.7.27
2009.6.5 52.60
8.6 49.62
50 49.78
8.6
40
8.6
30
8.6
8.6
20
●
2009.1.21 95 189
15.38
10
08/10

08/11

08/12

09/2

09/3

09/5

09/6

09/8

09/9

09/10

09/12

10/1

10/3

10/4

10/6

10/7

10/8

10/10
25
 SAP（ daily chart ）
€ 2007.9.21
43
42.08
August 2007 to Match 2008
●
41 1.97

39 1.97

37 1.97

35
1.97

33
1.97

31 1.97
1.97
29
28.29 2008.1.22
83 28.31
27
07/8

07/8

07/8

07/9

07/9

07/10

07/10

07/11

07/11

07/12

07/12

08/1

08/1

08/2

08/2

08/3

08/3
26
Nomura Holdings, Inc. (8604、daily chart)
March 2010 to September 2010

26

▽
26

27
Mizuho Financial Group（8411、daily chart ）
March 2010 to September 2010

26

▽
26

28
Caution

This report is intended to provide information that helps the user to

make proper investment judgments and does not aim to promote
particular investments.

The data contained in this report are based on reliable information,

but we do not guarantee the correctness or integrity of the data.

The information contained in this report is meant for your own use. It
is prohibited for this report to be provided or redistributed to any
third person, or modified or changed in any way. It is also prohibited
that copies or modified versions of this report be assigned or
transferred to or used by any third person.

T&C Financial Research,Inc.

Yukitoshi Higashino
y_higashino@tandcfr.com

29